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Leaders / The heavy responsibility of infrastructure / Transport firm motto worried chairman

Ryuzo Suzuki/The Yomiuri Shimbun

Masaki Yamauchi talks in an interview with The Yomiuri Shimbun.

By Tatsuya Sasaki / Yomiuri Shimbun Senior WriterYou’ll spot drivers from Kuroneko Yamato here and there all over town. Yamato Holdings Co. offers the door-to-door parcel delivery services that people today have come to depend on, but can the company overcome its problems with a labor shortage and the sharp increase in the number of deliveries? For this edition of “The Leaders” column, which highlights corporate management and senior executives, The Yomiuri Shimbun spoke about these issues with Masaki Yamauchi, president of Yamato Holdings.

“Enhancing the social infrastructure of TA-Q-BIN networks” — this phrase is included in our company management philosophy, which is recited each morning during the morning assembly.

The phrase was created in 1995. I was on the team that developed the management philosophy, and I showed our draft to Masao Ogura, the company chairman at the time. Ogura muttered to himself, “Social infrastructure? I wonder if this would be arrogant? Though I do want to include it.”

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  • Ryuzo Suzuki/The Yomiuri Shimbun

    Masaki Yamauchi

“So let’s put it in,” I urged.

“No, no, hang on a moment.” Ogura mulled over it again.

Although Ogura is the famed company manager who invented TA-Q-BIN, the company’s brand of door-to-door parcel deliveries, he was seriously troubled in that moment. In the end, the word “infrastructure” was included. So why did it trouble him this much?

I later found out it was the weight of the responsibility implied by the word “infrastructure,” which is also used by electricity and water supply services. Build trust and sustain it at all times. No pulling back, and running away is unacceptable.

We keenly feel the weight of the word these days, in the midst of the “takuhai crisis” — the door-to-door parcel delivery service crisis — which has been brought on by the rapid expansion of internet shopping and a labor shortage.

Ogura was a second-generation member of the family that established the company and the trailblazer who rejuvenated the Yamato Transport dynasty. In 1976, he launched TA-Q-BIN services and nurtured the company to be the top player in the industry, initiating new services one after the other, such as door-to-door delivery services for skiing and golf equipment, and refrigerated and frozen deliveries, otherwise known as Cool TA-Q-BIN.

I became interested in door-to-door parcel delivery services when I was a university student. I was living alone, and my mother used to send me cardboard boxes from Nagano Prefecture. I’d open them to find underwear, socks, and sweets packed in the spaces in between the essential items.

I thought to myself, “But you can buy this kind of stuff anytime in any convenience store,” but then a different idea flashed through my mind: “This TA-Q-BIN that delivers my parent’s love to me is pretty amazing. It connects people through parcels.” I don’t know why, but this impressed me, and I eventually selected Yamato Transport as the company I wanted to work for.

I was the last generation in the company to be directly taught by Ogura. Very soon after joining Yamato Transport, I was involved in the development of the Cool TA-Q-BIN service.

I created a business plan and explained it to then president Ogura. Sometimes my comments put the company’s convenience before the customers’ needs, like: “This will be difficult because it’s costly” or “We don’t have the technology for this service, so it’s impossible.” I was immediately scolded by Ogura.

Building the kind of logic that looks at what you can do to build the business, always looking at things from the perspective of the customer, is something that came to be driven deep into me.

Strain was passed onto drivers

The door-to-door parcel delivery business is undergoing a major transition. Lifestyles have changed, and internet shopping has suddenly expanded. Its spread has been accelerated because companies are offering a high level of service, reliably delivering parcels even on the same day.

In addition, although this is not news, the sense of urgency about the shortage of manpower has suddenly deepened. The rapid increase in the number of parcels being handled and the shortage of workers are problems that arose at an unexpected speed in tandem with each other.

According to the Land, Infrastructure, Transport and Tourism Ministry, over 4 billion items were handled in door-to-door deliveries during fiscal 2016. This represents an increase of over 30 percent from 10 years before. The ratio of effective job openings to job seekers for drivers, including truck drivers, reached as high as 2.8.

Door-to-door parcel delivery is a network industry, where the “density” of the service is important. Increased market share means that this density rises and productivity increases. Consequently, Yamato Holdings aimed to increase its market share in the past.

We thought we were dealing with the increase in the number of parcels by hiring short-term part-timers and by having robots handle the automated sorting, but we’ve reached our limits. The strain has been passed onto the drivers, who are at the forefront of the company, leading to problems of overwork. We regret the lack of attention to what was actually happening to drivers on the job.

On the other hand, we face an age of deflation. It’s difficult to increase prices due to the competition for market share with other companies. We’ve worked hard to keep delivery charges down, but we’ve found ourselves unable to absorb the costs involved.

In October, Yamato increased its base delivery charges by an average of about 15 percent for parcel deliveries for individual customers. This was the first time in 27 years. The company has also negotiated prices with major customers such as the internet shopping giant Amazon Japan G.K.

Logistics used to sit behind the scenes, but has now become visible due to the emergence of the crisis. The majority of customers are sympathetic to the price increase, understanding that redelivery and being able to choose the time slots in which parcels are delivered involves costs and puts stress on the company.

Our customers include many mail-order companies, but even with mail order, the person you eventually deliver the order to is an individual. Because we’re gradually gaining the understanding of individuals, mail-order companies also have found it easier to ask the customer to bear the burden of shipping costs.

We intend to use the increased revenue for areas such as the improvement of employee labor conditions and capital investment.

Receiving compensation proportionate to quality and maintaining service: If this drive were to spread throughout Japan’s service industry, overcoming deflation would also start to seem possible.

Management by all staff

Overcoming the lack of manpower is a problem that is difficult to solve decisively. First of all, we want to reduce the number of redeliveries and increase our ability to provide service. We will increase our variety of delivery methods. One idea is to set up lockers in stations and various spots around the city and let customers pick up their parcels there, as well as at convenience stores.

In some apartment complexes and high-rise buildings in the metropolitan area, we’ve launched joint-delivery services, delivering parcels from other companies. We’re also extending our services that incorporate information technology. Customers register as a member, and can specify their desired delivery time slots via email on the day before delivery. For the actual deliveries, we have also started testing artificial intelligence that determines the most efficient delivery route and displays it to the driver.

However, no matter how technology is used, logistics remains a labor-intensive industry, the lifeblood of which is people. The company intends to properly secure its labor supply.

Over the next three years, Yamato Holdings is planning to hire 10,000 employees who will specialize in night deliveries. This will lighten the burden on drivers and bring about an innovation in work style.

As the people who know our customers the best, drivers are our most important asset. If the driver is trusted, the whole company is loved. It’s the driver who thinks about what the customer needs; it’s they who decide and do the job. I explain to all employees our precious thought that we all represent the company.

We are proud that our door-to-door parcel delivery service has become a type of infrastructure in accordance with our management philosophy. In the past, the company has fought with the then Transport Ministry over regulations regarding such things as truck transportation line licenses and door-to-door delivery rates. We currently enjoy good relations with the Land, Infrastructure, Transport and Tourism Ministry. It is supportive about issues such as easing restrictions on the length of trucks or initiatives such as transporting parcels using local fixed-route buses.

The company’s history can also be seen as one of battling regulations. We particularly want the government to pay attention to deregulation to create new services, which would also contribute to the vitalization of the economy overall.

■ Key Numbers: 1.8 bil.

The number of items handled by Yamato Holdings reached 1.8 billion pieces in fiscal 2016, an increase of 7.9 percent over the previous year. Although it is a major player with a market share of about 47 percent, Yamato’s policy for the time being is to limit the number of parcels it accepts, mainly due to its labor shortage. The company was established in 1919. The group has about 200,000 employees, about 60,000 of whom are drivers. It has about 4,000 collection and distribution bases throughout the country.

■ Profile

Yamauchi was born in 1961 and is from Nagano Prefecture. He graduated from the faculty of literature at Kanazawa University in 1984 and joined Yamato Transport. In 2007, he became an executive officer at Yamato Holdings, which became a holding company in 2005. After being responsible for personnel and management strategies, Yamauchi became president of the affiliate firm Yamato Transport in 2011. He has held his current position since April 2015.Speech

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